The last few weeks of the earnings season have pointed to a new retail trend. While big names such as Macy's and J.C. Penney have reported disappointing earnings, the U.S. retail sales reported its biggest rise in over a year. So where are consumers spending?
"If you look at the composition of the retail numbers, people are eating out, people are shopping online," Stacey Widlitz, President, at SW Retail Advisors told CNBC. "Department stores are crumbling, which is in line with the numbers we saw, so people are shopping differently and again we have talked about this so many times that they are spending on experience."
U.S. retail sales figure last week showed consumers are spending plenty on sectors such as auto vehicles and sporting goods but not at traditional department stores. A string of disappointing earnings from retailers such as Macy's, J.C Penney and Nordstrom slammed retail stocks and put pressure on the Wall Street. Macy's had its biggest one-day loss since 2008, as the department store chain reported a 36 percent year-over-year drop in operating income.
During the first quarter, Macy's said its comparable sales fell 5.6 percent. That marks a deceleration from its fourth-quarter same-store sales decline of 4.3 percent, and represents its most severe decrease in this metric since the second quarter of 2009. During that quarter, Macy's comparable sales slid 9.5 percent. This has led to concern among analysts who think a growing and recovering economy should encourage more spending. But it looks like consumers have other plans with their money and high street shopping is not one of them.
"Stores like Macy's and JC Penney reported weak earnings and their stocks fell between 10-15 percent and then we got the best retail sales in more than a year," Widlitz said explaining that most of the growth is happening online.